The Best Tax Software
It’s tax time again and I’ve selected the best tax preparation software offerings and will walk you through how they’ve changed since last year. These solutions have a healthy list of improvements that not only make doing your taxes easier, but will help you to get back or hold onto as much money as possible. Here’s what to expect:
Best Value: TaxACT
This is a popular choice with taxpayers because TaxACT gives you a plethora of options. You can use its online platform to compile and file your taxes, download the software or receive it via CD-ROM in the mail. TaxACT is a little different than some other tax preparation software vendors on the market. First, their free federal version covers more than just simple returns and to put together a state return it’s only $14.95, which is at least half of what you’ll usually pay elsewhere.
It’s also cheaper in other ways: If you use the Deluxe online platform it’s only $9.95 for federal returns and another $8 for state returns. And you can play around with it online for free since you don’t have to pay for it until you print or e-file. For a breakdown of the different pricing options, visit TaxACT. Enhancements since last year include:
Quick Convert – This is a fast way to import data from last year, even if it’s from another software solution. Based on a new user’s answers to a couple questions, TaxACT helps them either import data from a PDF of last year’s return prepared by 11 various software solutions or bring in key data from a printed copy of last year’s return.
It Works on iPad – TaxACT Online 2011 Free Federal Edition, Deluxe and State are iPad Compatible.
Answer Center – This is a place where you can get free personalized tax help whether you have a specific tax question, are looking for a certain part of your return or need help with TaxACT.
Education and Retirement Tax Guides – The Deluxe tier includes printable explanations of tax issues related to education and retirement, including deductions and credits.
TaxACT Bookmarks – This feature isn’t new but was improved and lets you add a bookmark and notes to a certain part of your return and come back to it later.
More Business State Editions and e-filing options - With the addition of AZ, IA, and MO, TaxACT now offers 1065 and 1120S editions for 19 states, and 1120 editions for 18 states. It also now supports e-filing for most business returns for CA, FL, GA, IL, KS, MD, NY (including New York City), and WI.
TaxACT Central – This is a free app for iPhone and Android that provides mobile access to time and money-saving information such as an interactive tax return checklist with forms and information needed to prepare your taxes, a Help Center with free answers to common tax and technical questions and the current status of your federal and state returns after e-filing.
Best Usability and Support: TurboTax
Because TurboTax has a fantastic user interface people are willing to pay a bit more for this popular and well-trusted tax preparation solution. You can choose from online or software versions of the product. When comparing prices, keep in mind that only the software versions include state taxes.
Taxpayers who have a straightforward tax situation can prepare and e-file their federal return at no cost, using the Free Edition. You'll want to move up to Deluxe for the Deduction Finder, Audit Risk Meter and if you've had any life changes, like getting married or changing jobs. Premier adds investment properties and investments. And, Home and Business is for the self-employed. For more details, you can compare the many different options available at TurboTax. As for changes since last year, Intuit has added:
Free Tax Advice – This is for any customer and is available one-on-one via phone or live chat. The counselors are CPAs, enrolled agents and tax attorneys.
Audit Support Guarantee – This new feature provides free one-on-one audit guidance year-round from an experienced tax professional to help you know what to expect and how to prepare in the event you receive an audit letter from the IRS.
Smartphone App – The SnapTax app for iPhone and Android lets you snap a photo of your W-2, which it then reads with character recognition technology and automatically plugs your data into a 1040EZ. People with simple returns can get them done and filed in 10-15 minutes.
TurboTax for iPad – This is a TurboTax application that you can use to prepare and e-file your tax return using several higher tiers of TurboTax. It starts your tax return in the Deluxe version which is $29.95 and depending on your tax situation, you may be prompted to upgrade versions while preparing your return. It’s free to download and try out. When you are ready to e-file or print, you will have to make an in-app purchase to pay for the tax preparation.
Better Information About Who Qualifies as a Dependent – With more seniors living with their adult children or adult children remaining at home longer, this can be a confusing subject for some people. TurboTax has rewritten its entire section on dependents to make it easier for users to get every dependent benefit such as the dependent exemption, earned income tax credit, the child tax credit and educational tax write-offs.
A Beefed up Unemployment Section – With nearly one in ten Americans unemployed, TurboTax has made unemployment its own section to make sure it’s not overlooked by anyone. TurboTax also helps taxpayers identify related tax write-offs like job search expenses and moving expenses.
Imports From More Organizations – TurboTax now imports data directly from more than 400,000 banks, financial institutions, credit unions and employers to make it easier to access your tax information including your W-2, interest income, mortgage interest and dividend income.
Runner up: H&R Block At Home
TurboTax just edged out H&R Block this year, being slightly easier to use, but it's also a very good option. H&R Block At Home offers many options in terms of price and features, ranging from a free product that lets you file a simple federal return online to software available for download for $79.95 that small business owners can use to put together multiple complex federal returns—with many options in between. Whether you choose to use the online platform or download software to your PC or Mac, you’ll have to pay anywhere from $19.95 to $36.95 extra to file a state return with most of H&R Block At Home offerings.
New Mobile Filing Apps – Until the end of February you can file federal and state 1040EZ returns for free using your iPhone—you just snap a photo of your W-2 using your phone’s camera. Filing a more complex federal 1040? Now you can do it on your iPad for free, although to file a state return using your tablet it will cost $29.95.
Expanded Import – You can automatically import your tax data from last year’s return, even if the return was prepared with a different product.
Better Navigation – It now includes a bookmarking capability that lets you flag specific pages, leave notes or comments and revisit them later to make revisions or complete your return.
Alternate Ways to Log-in – Now you can access H&R Block At Home online through Facebook Connect, using your existing username and password.
Enhanced Search – They’ve added a search bar to the main navigation so you can quickly get advice from a community of tax professionals.